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Wednesday, July 25, 2007

Opsware goes to HP

Startup founders take note. Value creation through innovation should be supported by efforts in making others see that value. Take a look at this recent Hewlett-Packard's (NYSE:HPQ) $1.6 billion acquisition of Marc Andreesen’s Opsware (Nadaq : OPSW).

Sensing the need for a new approach to running modern datacenters and computer systems at high scale automation, Marc and his team started working with the view that expansion of internet was going to accelerate even more. Opsware was founded in 1999 (as Loudcloud) and it went public in 2001.

Analysts now find Opsware as a leader in "virtualization," which enables companies to run more than one operating system - like Windows and Linux - on a machine. Opsware provides the "broadest solution" for companies trying to cut costs by automating how they manage servers, networks and data storage. For example, when hackers discover vulnerabilities in a company's computer network, Opsware can save companies time when they need to install a software patch on computers running on various operating systems.

To give you a feel of its perceived value –

Tiny Opsware - which ranked 148th among Silicon Valley's 150 biggest companies last year based on its $102 m revenue, saw its first-quarter loss grow to $10.6 million. It has about 350 customers, including Microsoft, Goldman Sachs, Comcast and the Defense Department. Its sales rose at a 28 percent pace, but No. 1-ranked HP has the clout to raise awareness of the products and sell them through its huge, established corporate marketing machine.

"HP has a first-class opportunity to define the architecture and be the major vendor of infrastructure - hardware and software - for the huge Internet build-out of the next 10 years," says Andreessen in his blog post.

Hewlett-Packard's $1.6 billion (15.68x 2006 Revenue) deal for Opsware on Monday is widely being seen as Goliath hiring David to throw rocks at an even bigger Goliath - IBM.
Now you know how to sell a $102 m company for $1.6 b ? Get going...

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